Correlation Between Caribou Biosciences and Erasca

Can any of the company-specific risk be diversified away by investing in both Caribou Biosciences and Erasca at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Caribou Biosciences and Erasca into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caribou Biosciences and Erasca Inc, you can compare the effects of market volatilities on Caribou Biosciences and Erasca and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Caribou Biosciences with a short position of Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribou Biosciences and Erasca.

Diversification Opportunities for Caribou Biosciences and Erasca

0.81

Correlation Coefficient

Caribou Biosciences  Erasca

Very poor diversification

The 3 months correlation between Caribou and Erasca is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc and Caribou Biosciences is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Caribou Biosciences are associated (or correlated) with Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Erasca go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Erasca

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the Erasca. In addition to that, Caribou Biosciences is 1.23 times more volatile than Erasca Inc. It trades about -0.03 of its total potential returns per unit of risk. Erasca Inc is currently generating about 0.0 per unit of volatility. If you would invest  268.00  in Erasca Inc on September 27, 2024 and sell it today you would lose (11.00) from holding Erasca Inc or give up 4.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Caribou Biosciences  vs.  Erasca Inc

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Erasca Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erasca Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Erasca is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Caribou Biosciences and Erasca

The main advantage of trading using opposite Caribou Biosciences and Erasca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribou Biosciences position performs unexpectedly, Erasca can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Erasca will offset losses from the drop in Erasca's long position.

The idea behind Caribou Biosciences and Erasca Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.